Service Level Agreement Design and Service Provisioning for Outsourced

ServicesFilipe T. Marques, Jacques P. Sauvé and Antão Moura

Universidade Federal de Campina Grande

LANOMS 2007

THE PROBLEM

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Context

• Service Level Agreement (SLA) Design– How to choose SLA parameters?

• Service Provisioning– How to design infrastructure to meet Service Level

Objectives (SLOs)?– This is an associated problem

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Past solution: BDIM• We have a past solution using “Business –Driven

IT Management” (BDIM)• Summary– Invert!

• Dont’ go from SLOs to infrastructure design• Design optimal infrastructure according to other criteria and

then calculate SLOs– Optimal design uses business considerations

• Tradeoff between cost and loss• Minimize infrastructure cost + losses due to performance• Performance = availability, response time

– Business Impact model links IT and the business

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Problem with past solution• Whose business are we talking about in past

solution?– Only the client's business

• Only applicable to in-house Service Providers– ITIL v3 calls these “Type I” Service providers

• How to consider outsourced services?– There are 2 businesses– Sum of client loss and provider costs doesn’t make

sense– SLA includes rewards and penalties, not considered in

original model

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OUR OBJECTIVE

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Objectives

• Extend models and approaches to outsourced services

• Multidimensional design problem– Choosing SLA parameters (availability, response time)– Server farm design to provision the service

• Multi-objective optimization– How to link Client’s business and Provider’s business?– Need new business-IT linkage models

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OUR SOLUTION

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Conventional SLA design approach

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• Choose SLOs (availability and response time) and penalties and calculate lowest-cost infrastructure to meet SLOs

Standard solution• Build a performance model using available techniques• Inputs

– Services, load, customer behavior– Desired performance objectives (SLOs)– Resource classes (tiers), resources and attributes (processing

power, MTBF, MTTR, cost)• Output:

– In each class: calculate how many load-balanced servers (for load) and standby servers (for availability)

– Cost of infrastructure and hence of service• Our addition to standard models

– Performance model (reliability theory and queuing theory) to calculate response time distribution and availability

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How to bring in business perspective?• Better model the financial aspects of both

businesses

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Business model• Service price: markup over service price• Provider revenue = service price - penalties when

availability and response time performance not met + bonus as function of client profit– Can use other provider revenue models

• Provider profit = provider revenue - service cost• Profit margin = provider profit / provider revenue• Loss: due to unavailable service and poor

response time• Can calculate client revenue, cost, profit and

profit margin– Revenue model: fixed revenue per transaction

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Optimization problem

• Business-driven SLA design problem:– Maximizing service provider and client profit

margins – Multi-objective optimization problem

• This yields the optimal infrastructure– Can simply calculate resulting SLOs from

performance models

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AN EXAMPLE

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The setting

• E-commerce• 3 tiers: web, application, database• Customer Behavior Graph models page hits to browse

catalog, ask for product details, buy, register, pay, etc.• We use typical values for MTBF, MTTR, resource

demands, resource prices• We want to compare conventional approach with

BDIM approach– Conventional approach uses ad hoc values– Tmax: 1.5 seconds, Amin: 99.96%

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Cost comparison

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• Conventional seems better (cheaper): yearly cost: $324,600 vs $345,400

But: let's look at provider profit

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• Profit 12% better, on average

Is the client doing badly because of better provider profit?

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• Service costs increase but profit increases even more!• Client spends $38,550 more with the business-driven

approach while raising profits by almost $562,630

SLA design

• SLOs are simply calculated from optimal business-oriented design

• Tmax = 0.112s and Amin = 99.968 %

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CONCLUSIONS

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Summary

• We have presented a business-driven method to design SLAs for outsourced IT services

• Approach is to link provider and client financial results and tie these to the infrastructure

• Instead of defining SLA parameters in an ad hoc way, we optimize the business results and simply “pick off” the SLA values

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Conclusions

• We have shown that SLA design from a business perspective can:– Be used to choose SLOs, rather than uding the old

“finger in the air” approach– Yield better financial results for both service client

and provider businesses• An optimal tradeoff can be found that is beneficial to

both

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Future Work

• Major weakness is that business-IT linkage model is only applicable to an e-commerce type scenario– Need to investigate linkage models for other types

of business processes• Need to investigate other dimensions in the

SLA design space such as how to define optimal penalty and reward functions

• Rethink SLAs to put business-oriented SLOs?

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THANK YOU!

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